Another difficult week

Pakistan Stock Exchange remained under heavy pressure during the outgoing week ended on December 7, 2018 due to selling in various sectors. BRIndex100 lost 204.84 points on week-on-week basis to close at 4,071.41 points level. Average daily volumes stood at 152.777 million shares. BRIndex30 decreased by 758.24 point to close at 21221.62 points with average daily turnover of 99.776 million shares.
KSE-100 index declined by 1933.98 points on week-on-week basis and closed at 38,562.05 points. Trading activities slightly improved as average daily volumes on ready counter increased by 7.5 percent to 163.32 million shares as compared to previous week''s average of 151.99 million shares. Average daily trading value however decreased by 17.2 percent to Rs 8.04 billion.
The foreign investors remained net sellers of equities worth $2.5 million against an outflow of $51.1 million. Total market capitalization declined by Rs 285 billion to Rs 7.782 trillion. An analyst at AKD Securities said it was another difficult week for the market with KSE-100 index closing at 38,562.05 points, slipping 4.8 percent. Unexpected interest rate hike of 150bps to 10.0 percent by SBP in post market hours on previous Friday caught investors off guard, and coupled with PKR currency depreciation triggered across the board selling on Monday (KSE-100 index was down 3.3 percent). And when the going gets tough, tough gets going! Oil prices receded 2.4 percent in the run-up to the Opec''s meeting as non-Opec producers expand production, with pressure being exerted by Opec''s decision to delay a final decision on output cuts, awaiting support from non-Opec heavyweight Russia. Consequently, Oil & Gas sector lost 5.7 percent of its market capitalization during the week.
The negatives overshadowed the improving relationship of Pakistan with the US, with the latter coming for assistance in negotiating settlement of the Afghan War. Performance wise, top laggards in AKD universe were APL (down 13.88 percent), HASCOL (down 13.32 percent), PIOC (down 12.94 percent), PSO (down 12.47 percent) and PSMC (down 11.22 percent).
An analyst at JS Global Capital said that the KSE-100 index continued bearish momentum, however hitting with a heavier hammer this week with 4.8 percent on week-on-week basis decline, closing at 38,562 points. "We believe negative sentiments were broadly driven by concerns over lack of clarity on financial support from China and UAE", he said. It is now expected that China may offer a $2 billion loan. Also, increase in interest rates and devaluation of the rupee against the greenback during the last trading session of the previous week (SBP foreign exchange reserves down by $560 million) also added to investor concerns over future profitability of the corporate sector. In addition, $29 million selling from Mutual Funds also added to the ongoing pressure, where selling was mainly witnessed in the Cement ($1.8 million), E&P ($1.7 million) and Fertilizer ($1.2 million) sectors. Selling from Mutual Funds was mostly absorbed by the insurance companies with net buying accumulating to $18 million this week. Sectors that led the index decline were OMCs (down 10 percent), Engineering (down 8 percent), Autos (down 7 percent) and Cements (down 5 percent).